4 ms·

There is no such thing as money without trust of third parties. Transacting under the auspices of a neutral, trusted third party is what money means. The Fed h

by djur 13y ago

There is no such thing as money without trust of third parties. Transacting under the auspices of a neutral, trusted third party is what money means. The Fed has the backing of a sovereign power with its own currency and is central to the largest national economy in the world, as well as a great deal of the international economy. If MtGox's earned trust was an apple, you could see the Fed's from space.

tlrobinson 13y ago
"Transacting under the auspices of a neutral, trusted third party is what money means." Can you explain this a little more? How do I need to trust a 3rd party when I use, say, gold as money?
- pjc50 13y ago
  If you do that, you need to store it on your own premises and hand-deliver it. You can't do internet transactions that way. Crucially you can't do credit, which is a practical requirement of most business.
  - tlrobinson 13y ago
    My question wasn't suggesting gold was a good form of money, I was trying to understand why people believe all money requires a "trusted 3rd party". Anyway, Bitcoin does not require a trusted 3rd party any more so than gold does.
- cowls 13y ago
  Gold is not money... you should say "when I use dollars as money"
  - icebraining 13y ago
    Under what definition of money is that? Gold is and has always been money.
    - decode 13y ago
      Try telling that to the cashier at the local grocery store. Gold is not generally accepted as payment for goods and services in any culture that I know of (excluding jewelry and metal stores, of course). I'd be genuinely interested to hear about places where you can still take a lump of gold to a store and pay with it.
      - icebraining 13y ago
        You're confusing money with legal tender. But in any case, you can just travel to the Utah: http://www.nytimes.com/2011/05/30/us/30gold.html?pagewanted=all&_r=0 http://www.nytimes.com/2011/05/30/us/30gold.html?pagewanted=...
        decode 13y ago
        > You're confusing money with legal tender. I don't think I am. Something can be generally accepted as payment for goods and services without it being legal tender. > But in any case, you can just travel to the Utah That article is about coins produced by the US mint, not lumps of gold. And even so, the article says, "so far, it is hard to find anyone who is using gold or silver to buy anything."
        icebraining 13y ago
        Isn't your argument equivalent to saying that Latin isn't a language, because it's hard to find anyone who uses it to chat? Gold is money, it just has been superseded for most uses. And even so, when dollars are harder to use, gold is still used for some large transactions: http://online.wsj.com/news/articles/SB10001424127887324352004578136973602198776 http://online.wsj.com/news/articles/SB1000142412788732435200...
        nemo 13y ago
        You can read many Latin works, and find the language taught in many schools. Since it isn't spoken except in a handful of limited contexts, it gets the special qualifier "dead language." Gold is basically a "dead money." Hung onto by various people for historical and religious legacies, but not really suited for modern use.
  - schuylerdade 13y ago
    This brings up a point I've never really understood about the hoarding of gold. Why? Let's say there is some catastrophic meltdown of society and money is a thing of the past. What am I supposed to do with the bar of gold you trade me for goods? Rather than assume that everyone's still on board the "gold is valuable and not just rocks" train, isn't it far more sensible to trade goods or services for goods or services? I would think that, in that I am exchanging a thing that I cannot use just so I can later exchange it for something I Can use, I am using gold as money. (Same deal if I trade goods for shoes that are the wrong size or handfuls of scratch 'n sniff stickers.)
- lmm 13y ago
  Gold isn't money, it's an asset you can barter with.
- cmdkeen 13y ago
  Are you a qualified assayer? You trust the other person is giving you gold, or you trust the individual who tests it. You trust the system that provides you with an understanding of the relative value of the gold you're holding so that you aren't massively overpaying. There's a reason Jesus through the money changers out of the temple - they were abusing that 3rd party trust.
  - tlrobinson 13y ago
    Ok, this is one area where Bitcoin is demonstrably better than pretty much any other form of money: it's cryptographically impossible to counterfeit.
- Lazare 13y ago
  If you're using gold as money, then you are certainly trusting many third parties. Consider; what does using gold as money mean? Are we trading notional gold? Certificates that claim to represent gold in some vault? Obviously you need to trust the issuer of the certificates. Are you using minted gold coins? Obviously you need to trust the mint and more generally the entire financial system that equates those coins with a certain value. (The history of coin clipping, adulteration of coinage, and the results of having multiple currencies circulating at once[1] should show why this is important.) In fact, the only way that you don't actually need to trust a 3rd part is if... ...you're trading a known quantity of gold to someone else strictly for its value as gold. In which case you are actually trading in gold as a commodity; the technical term is barter. It simply does not fit the definition of money. [1]: Eg, Gresham's Law: http://en.wikipedia.org/wiki/Gresham's_law http://en.wikipedia.org/wiki/Gresham's_law
  - crististm 13y ago
    Gold as in Au does not need any third party. Certificates... that is another thing.
    - mpyne 13y ago
      > Gold as in Au does not need any third party. Even that generally needs a third party, unless you happen to be one of the world's experts in distinguishing counterfeit coin or bullion from gold of a certified purity.
      - tlrobinson 13y ago
        Ok, but Bitcoin doesn't need an expert to do that, just widely available open source software that's already been vetted by thousands of developers.
        mpyne 13y ago
        So now the trust devolves onto the designers of the Bitcoin protocol, the software programmers implementing said protocol, the programmers implementing the operating system kernel that said software runs on, etc. etc. etc. Just ask the MtGox users about how completely ironclad that trust is. Sure, "transaction malleability" was identified in 2011, but that didn't help the users of MtGox, and the other exchanges had to take corrective action in 2014 as well. If anything Bitcoin is even worse for the normal user; physical security is much much easier for most of us to grasp and implement. Is Aunt Tillie going to be able to ensure that she never gets too rich, so as to entice a cyberattack to steal all her Bitcoin wealth?
- saalweachter 13y ago
  You are relying on third parties to accept the gold you receive for approximately the same value you spent to obtain it. You have some apples, and Alice has some oranges. You would like some oranges, but Alice doesn't want any apples. So you go to Bob and sell Bob some apples for gold. You give Bob a bushel of apples, Bob gives you a bar of gold. Now you go take this bar of gold to Alice and try to trade it to Alice for a bushel of oranges. Alice tells you to fuck off, she doesn't want a bar of gold any more than she wants an apple. Bob doesn't want his bar of gold back, no backsies. No one in town wants a bar of gold, in fact.
  - tlrobinson 13y ago
    There's a big difference between trusting you'll be able to trade something which has historically been valued by a lot of people at a certain amount, and trusting someone won't steal your money, which is generally what people mean when referring to a "trusted third party".

by djur 13y ago

tlrobinson 13y ago

"Transacting under the auspices of a neutral, trusted third party is what money means." Can you explain this a little more? How do I need to trust a 3rd party when I use, say, gold as money?

pjc50 13y ago
If you do that, you need to store it on your own premises and hand-deliver it. You can't do internet transactions that way. Crucially you can't do credit, which is a practical requirement of most business.
- tlrobinson 13y ago
  My question wasn't suggesting gold was a good form of money, I was trying to understand why people believe all money requires a "trusted 3rd party". Anyway, Bitcoin does not require a trusted 3rd party any more so than gold does.
cowls 13y ago
Gold is not money... you should say "when I use dollars as money"
- icebraining 13y ago
  Under what definition of money is that? Gold is and has always been money.
  - decode 13y ago
    Try telling that to the cashier at the local grocery store. Gold is not generally accepted as payment for goods and services in any culture that I know of (excluding jewelry and metal stores, of course). I'd be genuinely interested to hear about places where you can still take a lump of gold to a store and pay with it.
    - icebraining 13y ago
      You're confusing money with legal tender. But in any case, you can just travel to the Utah: http://www.nytimes.com/2011/05/30/us/30gold.html?pagewanted=all&_r=0 http://www.nytimes.com/2011/05/30/us/30gold.html?pagewanted=...
      - decode 13y ago
        > You're confusing money with legal tender. I don't think I am. Something can be generally accepted as payment for goods and services without it being legal tender. > But in any case, you can just travel to the Utah That article is about coins produced by the US mint, not lumps of gold. And even so, the article says, "so far, it is hard to find anyone who is using gold or silver to buy anything."
        icebraining 13y ago
        Isn't your argument equivalent to saying that Latin isn't a language, because it's hard to find anyone who uses it to chat? Gold is money, it just has been superseded for most uses. And even so, when dollars are harder to use, gold is still used for some large transactions: http://online.wsj.com/news/articles/SB10001424127887324352004578136973602198776 http://online.wsj.com/news/articles/SB1000142412788732435200...
        nemo 13y ago
        You can read many Latin works, and find the language taught in many schools. Since it isn't spoken except in a handful of limited contexts, it gets the special qualifier "dead language." Gold is basically a "dead money." Hung onto by various people for historical and religious legacies, but not really suited for modern use.
- schuylerdade 13y ago
  This brings up a point I've never really understood about the hoarding of gold. Why? Let's say there is some catastrophic meltdown of society and money is a thing of the past. What am I supposed to do with the bar of gold you trade me for goods? Rather than assume that everyone's still on board the "gold is valuable and not just rocks" train, isn't it far more sensible to trade goods or services for goods or services? I would think that, in that I am exchanging a thing that I cannot use just so I can later exchange it for something I Can use, I am using gold as money. (Same deal if I trade goods for shoes that are the wrong size or handfuls of scratch 'n sniff stickers.)
lmm 13y ago
Gold isn't money, it's an asset you can barter with.
cmdkeen 13y ago
Are you a qualified assayer? You trust the other person is giving you gold, or you trust the individual who tests it. You trust the system that provides you with an understanding of the relative value of the gold you're holding so that you aren't massively overpaying. There's a reason Jesus through the money changers out of the temple - they were abusing that 3rd party trust.
- tlrobinson 13y ago
  Ok, this is one area where Bitcoin is demonstrably better than pretty much any other form of money: it's cryptographically impossible to counterfeit.
Lazare 13y ago
If you're using gold as money, then you are certainly trusting many third parties. Consider; what does using gold as money mean? Are we trading notional gold? Certificates that claim to represent gold in some vault? Obviously you need to trust the issuer of the certificates. Are you using minted gold coins? Obviously you need to trust the mint and more generally the entire financial system that equates those coins with a certain value. (The history of coin clipping, adulteration of coinage, and the results of having multiple currencies circulating at once[1] should show why this is important.) In fact, the only way that you don't actually need to trust a 3rd part is if... ...you're trading a known quantity of gold to someone else strictly for its value as gold. In which case you are actually trading in gold as a commodity; the technical term is barter. It simply does not fit the definition of money. [1]: Eg, Gresham's Law: http://en.wikipedia.org/wiki/Gresham's_law http://en.wikipedia.org/wiki/Gresham's_law
- crististm 13y ago
  Gold as in Au does not need any third party. Certificates... that is another thing.
  - mpyne 13y ago
    > Gold as in Au does not need any third party. Even that generally needs a third party, unless you happen to be one of the world's experts in distinguishing counterfeit coin or bullion from gold of a certified purity.
    - tlrobinson 13y ago
      Ok, but Bitcoin doesn't need an expert to do that, just widely available open source software that's already been vetted by thousands of developers.
      - mpyne 13y ago
        So now the trust devolves onto the designers of the Bitcoin protocol, the software programmers implementing said protocol, the programmers implementing the operating system kernel that said software runs on, etc. etc. etc. Just ask the MtGox users about how completely ironclad that trust is. Sure, "transaction malleability" was identified in 2011, but that didn't help the users of MtGox, and the other exchanges had to take corrective action in 2014 as well. If anything Bitcoin is even worse for the normal user; physical security is much much easier for most of us to grasp and implement. Is Aunt Tillie going to be able to ensure that she never gets too rich, so as to entice a cyberattack to steal all her Bitcoin wealth?
saalweachter 13y ago
You are relying on third parties to accept the gold you receive for approximately the same value you spent to obtain it. You have some apples, and Alice has some oranges. You would like some oranges, but Alice doesn't want any apples. So you go to Bob and sell Bob some apples for gold. You give Bob a bushel of apples, Bob gives you a bar of gold. Now you go take this bar of gold to Alice and try to trade it to Alice for a bushel of oranges. Alice tells you to fuck off, she doesn't want a bar of gold any more than she wants an apple. Bob doesn't want his bar of gold back, no backsies. No one in town wants a bar of gold, in fact.
- tlrobinson 13y ago
  There's a big difference between trusting you'll be able to trade something which has historically been valued by a lot of people at a certain amount, and trusting someone won't steal your money, which is generally what people mean when referring to a "trusted third party".